Northern Rock savers 'to lose 100% guarantee'

Feb 10 2010 By Karen Dent, The Journal

SAVERS with Northern Rock are set to lose their 100% guarantee their on their deposits as the Government gears up to sell the nationalised bank back to the private sector.

It is thought the Treasury will give savers three months’ notice before removing the guarantee, which was put in place in 2007 to stop the run on the Newcastle-based bank.

That will mean Rock savers’ first £50,000 will still be insured by the Government, the same level of protection as people who deposit their money with other banks.

However, it is thought customers who took out individual savings accounts and longer-term bond products with Northern Rock since September 2007 will retain the 100% guarantee.

The Government-owned bank was officially split in two on January 1 into a “good bank” called Northern Rock and a “bad bank” named Northern Rock Asset Management (NRAM).

The good bank, which has saving deposits of £19bn, £10bn of quality mortgages and 76 branches, will be sold off to the private sector and is expected to raise more than £2bn. NRAM has £50bn of mortgages and £4.5bn of unsecured loans.

Sir Richard Branson’s Virgin Money, the National Australia Bank, which owns the Yorkshire and Clydesdale banks, and Spanish group Santander have all been linked with possible bids to buy the Rock.